Value Proposition canvas- Customer needs and pains
Policies And Technologies
1.
2. The “energy and CO 2 economy” Oil Biomass Gas Coal Nuclear Renewables Primary Energy Liquids Direct combustion Industry and Manufacturing Mobility Final Energy Agriculture and Land Use Energy Energy Energy Buildings Power Generation
3. Pathways to 2050 0 50 100 150 200 250 300 350 400 450 $0 $20,000 $40,000 $60,000 GDP per capita, US$ 2000 (ppp) Energy per capita, GJ Wealthy developed Developed Leading developing Developing Improving energy efficiency 2025 2050 Falling CO 2 emissions per unit of energy 2008
4.
5. How can all this be achieved ? Government policy will be important
6. Key Sectors in the “energy & CO 2 economy” Oil Biomass Gas Coal Nuclear Renewables Primary Energy Liquids Direct combustion Industry and Manufacturing Mobility Final Energy Agriculture and Land Use Energy Energy Energy Buildings Power Generation
9. New Technologies Alternative product Number of installations Technology cost 0 20 40 60 80 100 1 10 100 1000 Benefit to deploy Earlier deployment through demonstration Discover & Develop Must be well funded to drive innovation. Deployment Driven by new features and price. Demonstration (at scale) A critical step in the early commercialization of a technology
10. New Energy Technologies – e.g. CCS Power generation without CCS Number of installations Technology cost 0 20 40 60 80 100 1 10 100 1000 CO 2 price Earlier deployment through demonstration Discover & Develop Need to refocus and rapidly expand R&D. Deployment Typically driven by the CO 2 market Demonstration No early adopters and high start-up costs so this phase will need help.
11. A structured policy approach is needed Power Generation / Industry & Manufacturing Transport Commercial & Domestic (Buildings) Discover & Develop Demonstrate Deploy
12.
13. A structured policy approach is needed A simple, high profile and credible target for the renewables’ share of power generation, supported by a range of incentives to encourage investment. Measures to incentivise new fuels based on their “well-to-wheels” CO 2 reduction potential, implementation of vehicle efficiency standards and vehicle/road-use programs targeted at drivers A series of robust energy standards for buildings, appliances etc. with incentives for retrofit of existing infrastructure. "Cap and trade" emissions trading systems for power generators, most industrial facilities and large fleet transport such as aviation.
14. Emissions Trading or “Cap-and-trade” Initial emissions 100 Mt p.a. Year 5 at 95 Year 15 at 80 Year 10 at 88 Offsets Allowance trading between facilities $ CO 2 Government issues 88 million allowances into the economy CCS Project Efficiency Project
15.
16. An Introduction to Cap-and-Trade Courtesy Holmes Hummel, PhD Using Musical Chairs: An Illustration of Managed Scarcity
21. Musical chairs Sure! For that price, I can finance an efficiency upgrade, eliminating my need for a pollution permit. 2009
22.
23.
24. The new flow of capital in the economy CO 2 Goods and services pass into the economy, with the price of CO 2 embedded Emitters buy allowances from the government through auction Government recycles auction revenue to consumers through the tax system
25.
26. The CO 2 price and allocation Points of regulation Resource Power Generation Factories Heavy industry Light industry Consumer Electricity Time CO 2 price impact Free allocation early on as little / no price pass through Progressive shift to auctioning as the CO 2 price impacts the economy Full auctioning as the CO 2 price impacts the entire value chain Auction funds recycled to consumers through the tax system
31. Going global ! 2000 2005 2010 2015 2020 2025 Pre-Kyoto Kyoto Post 2012 Linkage framework Linkages develop between all systems and more systems appear Danish-ETS UK-ETS Australian ETS US National or North American “cap-and-trade” Norwegian ETS EU-ETS CDM CDM evolves to include clean electricity mechanism Expanding EU-ETS Japan technology standards New technology mechanisms evolve (e.g. for CCS) China adopts CCS standard New Zealand ETS
32.
33. Evolution of the EU Cap 2005 2006 2007 2008 2009 2010 2012 2013 2014 2015 2016 2018 2019 2020 2021 2011 2017 2180 MtCO 2 pa 2083 actual in 2005 1964 Gradient – 1.74% Phase II Phase III Phase I Start up Phase 1620 -20% -30% Trend line continues aiding predictability Not to scale!
34. EU ETS price and market activity Key : Dec 07 delivery Dec 08 delivery Dec 09 delivery Source: Point Carbon
35.
36. Traffic Road transport: > 750 million light duty vehicles ~ 70 million trucks and buses > 250 million motorbikes ~ 5 billion tonnes CO 2 p.a.
37. Change takes time 0 500 1000 1500 2000 2500 2000 2010 2020 2030 2040 2050 Total vehicles, millions Large scale "alternative" vehicle manufacture starts in 2010 with 200,000 units per annum and grows at 20% p.a. t hereafter. Total a lternative v ehicles Total t raditional v ehicles Annual total vehicle growth of 2% p.a. Annual vehicle production growth of 2% p.a.
38. Transport - an ongoing evolution Energy sources Energy carrier Drive-train options Electrolysis Solar Wind Hydro Nuclear CCGT Conventional and advanced bio-fuels Biomass Liquid fuels Oil Conventional ICE Hydrogen FCV CO 2 Gas Coal Partial oxidation Syngas CO, H 2 Fischer– Tropsch Synthetic fuels Shift reaction Hybrid Electricity Electric vehicle Plug-in hybrid
43. New Technologies Alternative product Number of installations Technology cost 0 20 40 60 80 100 1 10 100 1000 Benefit to deploy Earlier deployment through demonstration Discover & Develop Must be well funded to drive innovation. Deployment Driven by new features and price. Demonstration (at scale) A critical step in the early commercialization of a technology
44.
45. New Energy Technologies – e.g. CCS Power generation without CCS Number of installations Technology cost 0 20 40 60 80 100 1 10 100 1000 CO 2 price Earlier deployment through demonstration Discover & Develop Need to refocus and rapidly expand R&D. Deployment Typically driven by the CO 2 market Demonstration No early adopters and high start-up costs so this phase will need help.
56. The prospect of emission targets looms 0 50 100 150 200 250 300 350 $0 $10,000 $20,000 $30,000 $40,000 GDP per Capita, US$ ppp (2000) Energy per Capita, GJ Finland Romania “ Developed” countries with Kyoto Targets Korea Taiwan Singapore China Thailand Malaysia Rapidly emerging economies in Asia
57. Two pathways to consider No target under the Kyoto Protocol Opportunity to respond to the market through the Clean Development Mechanism National action agreements National policies and measures Sectoral agreements Funding via market mechanisms Use of clean-technology funds Direct recruitment to cadre of nations with targets National emission target 2013 - 2020 2013 - 2020 2018 - 2030 2008 - 2012
58. The global abatement curve Abatement GtCO 2 e per year in 2030 C A Large scale abatement within the electricity sector. Some land restoration. Energy efficiency measures, land use practices, avoided deforestation. Higher cost technologies still moving down the cost curve B Cost of abatement € /tCO 2 e
59. The anatomy of a deal Abatement GtCO 2 e per year in 2030 C A Developed Developing Less Developed Absolute targets National policies and measures: SD-PAMs, NAMAs, without access to international project mechanisms. Large scale action in the electricity (and transport) sector driven by international project mechanisms and clean tech funds. Large scale action through cap-and-trade, transport measures (vehicle efficiency, low carbon fuels etc.) and building regulations Support for Demonstration programmes globally Smaller scale clean development projects utilising the CDM Cost of abatement € /tCO 2 e B Targeted systems for agriculture and deforestation D
60. Going global ! 2000 2005 2010 2015 2020 2025 Pre-Kyoto Kyoto Post 2012 Linkage framework Linkages develop between all systems and more systems appear Danish-ETS UK-ETS Australian ETS US National or North American “cap-and-trade” Norwegian ETS EU-ETS CDM CDM evolves to include clean electricity mechanism Expanding EU-ETS Japan technology standards New technology mechanisms evolve (e.g. for CCS) China adopts CCS standard New Zealand ETS